[UPDATED: Nov 18, 2021]
If you haven’t already invested in suburban rental properties, it’s time to start.
Suburban rental properties are not slowing down – they are gaining momentum. The American family is turning to single-family rental homes like the American settlers headed West! They are not looking for land, but they are looking for space – space for bedrooms, bathrooms, storage, a yard, home offices, etc. They’re also looking for lifestyle as they throw in the towel on bidding wars to buy a place and opt, instead, to rent while keeping that down payment in the bank.
This trend is driving new rent paying tenants to the single-family landlord while also providing the landlords with an opportunity to raise their rents. According to CoreLogic, single-family homes rental cost increased 9.3% in August 2021 nationwide. This represents a 2.2% year-over-year increase since August 2020. Since January 2021, the national median rent has increased by an astounding 16.4%, with the typical rent costing $1,633 per month. That is $169 more than this time last year and almost $200 more than 2019’s numbers.
How can the American family afford these kinds of rental rate increases? For many, the answer lies in a lower cost of living spelled S-U-B-U-R-B-I-A. Post-pandemic teleworking still represents a large part of the workforce’s reality. In September 2021, 13.9% of the American workforce teleworked at some point in the month. Even pre-pandemic, two-thirds of people worldwide work away from the office at least once a week, according to researchers at Zug. And working remotely allows workers to move farther from the office and enjoy a lower cost of living outside city limits.
If you’re looking to take advantage of this opportunity and diversify your portfolio with single-family rental investment properties, here’s everything you should know to get the most out of your rental.
We always recommend investing in areas you know. Within those areas, focus on suburbs with a growing cultural scene that mimics that of a big city. Think local coffee shops hosting open mic nights, arts and theater centers, nature conservatories or gardens, and public spaces for family-friendly festivals and events.
“I only invest in things I understand.” – Warren Buffet
For fleeing urbanites, the “must-haves” are luxuries that were once unaffordable for them in the city:
An unexpected upside of the pandemic for landlords: Renters are no longer coming around to “kick the tires.” Potential renters want to minimize their trips out of the house. Chances are, if they’ve come to your door, they’re serious about signing a lease.
Your job is to make that decision even easier. Start with the basic principles of marketing rental properties, and then double-down on online efforts. Widen the geographical target area for your social ads to include urban areas. Instead of standard photos, give prospective tenants the option for a 3D tour or virtual walk-through. You may find this saves you time in the long run by saving you trips to and from the property for showings.
Fast-track the process of finding your next tenant with a bridge loan that offers 100% funding up front. With your cash still in your pocket, you can take the time to create an irresistible listing, market your rental property online, and vet tenants appropriately. Plus, bridge loans relieve some of the pressure of pushing paperwork through quickly (which, unfortunately, COVID has complicated.)
It’s simple: bridge loans remove the stress and urgency that exists during the gap between rehab and tenant, and ultimately help you secure a steady stream of mailbox money with less stress and more flexibility.
Great investors stay cool-headed while looking for investment opportunities they understand. Right now, the opportunity to diversify your portfolio with rental investment properties in the ‘burbs’ is as easy to attain as it is to understand. Don’t delay…start today!